Friday, January 30, 2015


Even as I write the new Prime Minister of Greece seems bent on not honouring the Debt agreements under the restructuring plan.

The Germans are equally determined not to agree to longer debt payment schedule or any other kind of relief.The Europeans have also categorically stated that they will not write down any debt.It would set the wrong precedent.

Sadly,Alexis Tsipras does not want to privatise state assets nor does he accept economic reality.

That means a Grexit...!!

If the withdrawal is unorderly,chaotic or mismanaged then the repercussions for Greece in the long term will be severe,especially for its general population.Already talk of Banks failing,the currency depreciating again if the drachma is reintroduced.

Inflation,a catastrophic depression and the risk of Greece becoming a basket case are high.As if the Zimbabwe's of the world needed new additions.

What is proves is that no rigid system will work for countries ever closely linked by trade and people.Whether it be socialism or capitalism in its true form,what is required is adaptability of the political class to a world nuanced to subtle economic indicators.

The Euro was expected to lead to free market reforms across the whole of Europe when envisaged as a single currency but that has not happened and protectism under various guises exists in different pockets of a single country in many cases.

Secondly the economies have not allowed immigration from weaker countries to stronger due to racial and cultural differences that have been in Europe for centuries.

Third,it is unfortunate to expect strong economies like Germany to send billions in aid to weaker nations.

The whole concept of a single currency and a one-monetary-policy-fits all approach has failed.It can never hope to become one country under a democratic system that will satisfy all its residents or make them feel that they belong.

That is what makes me highly pessismistic on the long run survival of the Eurozone as we know it today.

When and if it collapses many years hence,the repercussion of trillions of dollars or pounds of debt being written of or devalued will create a depression so huge that certainly the entire World will be sucked in.

I hope sense prevails and if there is to be a GREXIT then it is managed carefully and sensibly.

Sunday, January 25, 2015

"Service Before Self".The Indian Armed Forces Show the Way

1,129,900 serving personnel.
9,60,000 reserve personnel.
Approximately 3500 Tanks.
Approximately 6700 Artillery Pieces.
Approximately 1750 Aircraft including fighters,transport and helicopters.
2 Aircraft Carriers,11 Destroyers,15 Frigates.

The 4th largest standing army in the world.Fights on Land,Sea and Air.Fights in the frigid arctic conditions of Siachen(AVERAGE TEMPERATURE -50 C).The Thar in Rajasthan(Average temp +50 C),on the turbulent Bay of Bengal,the salty Rann of Kutch.

In fair weather or foul.

Its said that statistics do not lie.Maybe.But sometimes they do not tell the whole story.

When floods threaten the population,call in the Army.
When a Cyclone or Tsunami hits,call in the Army.
When there is civil unrest,religious or otherwise,call in the Army.

Probably the most disciplined fighting force in the World.Defends the Nation's borders,defends the internal security across environments that would challenge the most advanced fighters globally.

The one true Indian institution that has stood above religious and caste considerations.Never have so many sacrificed so much for so little return.The pure naked courage under fire and the attitude of persevering in the face of overwhelming odds has been in evidence right from the World War I in the trenches of France or the sahara in Egypt right down to Afghanisthan,Arunachal or Kargil are too well documented.

Off all the nationistic things that is expected from the new Government I feel that 2 years of military service should be made mandatory for every teen in India.

As I have mentioned in earlier blogs I had the time at one point to work closely with some military personnel at the Eastern frontier and then in New Delhi.The lack of proper snow shoes,goggles,modern webbing and weaponry is shocking.Packed rations,especially for high altitude fighters is the most felt for need that I saw.

Ask any Indian and the one place that 90% feel is truly representative of the people is the - Indian Army.

Jai Hind.

Wednesday, January 14, 2015

Is 25 bips Repo Rate Cut Enough?

Finally the RBI Governor bowed to sentiments,sharp fall in crude globally and inflation in India to cut the Repo rate by 25 bps.

It is nowhere enough to kickstart growth although there are signs that he might cut the rate further in February or March.If we look to pick the positives,the direction in which this step takes Banking Policy is noteworthy.

WPI for December was .11%
Retail inflation climbed marginally from 4.4 to 5%

Some indicators though remain a double edged sword:-

Fall in crude,Brent is trading between $45-48
Copper crashed to a six year low

The oversupply of crude in the Eurozone aligned with fears of stagflation,low growth,China's hard landing are making themselves reheard.
Low crude prices are as bad for Global Growth as is high inflation.

Domestically the Banks Balance sheets will have a negligible effect unless they can clean up their BS of non performing assets before embarking on ambitious expansions.Feeling is that this cut in Repo will not be passed on to the public at large.

Sentimentally good move.But at the moment that is all it is.